EXHIBIT 4.1
AMENDMENT TO CREDIT AGREEMENT
This AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), is dated as of
September 12, 2002 by and among D & E COMMUNICATIONS, INC., a Pennsylvania
corporation (the "Borrower"), the Subsidiaries of the Borrower listed on the
signature pages hereto (the "Subsidiary Guarantors" and collectively with the
Borrower, the "Loan Parties"), COBANK, ACB, as administrative agent for the
Lenders (as defined in the hereinafter defined Existing Credit Agreement) and a
Lender (in such capacity, the "Administrative Agent") and each of the Lenders
executing a signature page hereto.
RECITALS
WHEREAS, the Loan Parties, the Administrative Agent and the Lenders are
parties to that certain Credit Agreement entered into as of May 24, 2002 (as
heretofore amended, the "Existing Credit Agreement"; and as amended by this
Amendment, the "Amended Credit Agreement"; capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the
Existing Credit Agreement);
WHEREAS, the Loan Parties, the Administrative Agent and the Lenders
desire to enter into this Amendment to amend certain provisions of the Existing
Credit Agreement; and
NOW, THEREFORE, in consideration of the premises and the agreements,
covenants and provisions herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. AMENDMENTS TO EXISTING CREDIT AGREEMENT
Subject to the satisfaction of the conditions precedent set forth in
Section 3 of this Amendment, the Loan Parties, the Administrative Agent and the
Lenders hereby agree that the Existing Credit Agreement be, and it hereby is,
amended as follows:
1.1 General. Upon and after the date hereof, all references to the
Existing Credit Agreement in that document or in any other Loan Document shall
mean the Amended Credit Agreement. Except as expressly provided herein, the
execution and delivery of this Amendment do not and will not amend, modify or
supplement any provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of, the Existing Credit Agreement, and, except
as specifically provided in this Amendment, the Existing Credit Agreement shall
remain in full force and effect and is hereby ratified and confirmed.
1.2 Amendments to Sections 1.2(B) and (G). Each of Sections 1.2(B)
and (G) of the Existing Credit Agreement is hereby amended by amending and
restating such subsection in its entirety as follows:
(B) Applicable Margins. From September 12, 2002 and continuing
through the day immediately preceding the first Adjustment Date
occurring after November 24, 2002, the applicable Base Rate Margin and
LIBOR Margin shall be 3.00% and 4.00% per
Amendment to Credit Agreement/ D&E
annum, respectively for the Revolving Loans and Term Loan B, and 3.125%
and 4.125% per annum, respectively for the Term Loan A. Commencing on
such Adjustment Date, the applicable Base Rate Margin and LIBOR Margin
for each Loan shall be for each Calculation Period the applicable per
annum percentage set forth in the pricing table below opposite the
Total Leverage Ratio of Borrower; provided, that effective upon the
occurrence of an Event of Default and until such Event of Default is
cured or waived the applicable Base Rate Margin and LIBOR Margin shall
be 3.00% and 4.00% per annum, respectively, for the Revolving Loans and
Term Loan B, and 3.125% and 4.125% per annum, respectively, for the
Term Loan A.
PRICING TABLE
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Revolving Loans and
Term Loan B Term Loan A
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Base Rate LIBOR Base Rate LIBOR
Total Leverage Ratio Margin Margin Margin Margin
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> Than = To 4.5 3.00% 4.00% 3.125% 4.125%
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> Than = To 4.0 and < 4.5 2.75% 3.75% 2.875% 3.875%
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> Than = To 3.0 and < 4.0 2.50% 3.50% 2.625% 3.625%
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> Than = To 2.0 and < 3.0 2.00% 3.00% 2.250% 3.125%
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< 2.0 1.75% 2.50% 2.000% 2.625%
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(G) Selection, Conversion or Continuation of Loans; LIBOR and
Long-Term Fixed Rate Availability. Provided that no Default or Event of
Default has occurred and is then continuing, Borrower shall have the
option to (i) select all or any part of a new borrowing to be a LIBOR
Loan or, if the Term Loan A, a Long-Term Fixed Rate Loan, in a
principal amount equal to $2,000,000 or any whole multiple of $500,000
in excess thereof, or a Base Rate Loan in a principal amount equal to
$1,000,000 or any whole multiple of $250,000 in excess thereof, (ii)
convert at any time all or any portion of a Base Rate Loan in a
principal amount equal to $2,000,000 or any whole multiple of $500,000
in excess thereof into one or more LIBOR Loans or, if the Term Loan A,
Long-Term Fixed Rate Loans, (iii) upon the expiration of any Interest
Period, convert all or any part of any LIBOR or Long-Term Fixed Rate
Loan into a Base Rate Loan, and (iv) upon the expiration of its
Interest Period, continue any LIBOR or Long-Term Fixed Rate Loan in a
principal amount of $2,000,000 or any whole multiple of $500,000 in
excess thereof into one or more LIBOR or Long-Term Fixed Rate Loans for
such new Interest Period(s) as selected by Borrower, subject to the
other provisions herein. Each LIBOR Loan must be made under either the
Term Loan A Facility, Term Loan B Facility or the Revolving Loan
Facility, but may not be made under more than one concurrently. Each
Long-Term
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Amendment to Credit Agreement/ D&E
Fixed Rate Loan may be made only under the Term Loan A. During any
period in which any Default or Event of Default is continuing, as the
Interest Periods for LIBOR or Long-Term Fixed Rate Loans then in effect
expire, such Loans shall be converted into Base Rate Loans and the
LIBOR and Long-Term Fixed Rate options will not be available to
Borrower until all Events of Default are cured or waived.
Notwithstanding the foregoing, there may be no more than a total of
eight (8) Loans outstanding under the Facilities at any one time
(including, as a single Loan, all amounts under a single Facility
accruing interest at the Base Rate).
1.3 Amendment to Section 3.12. Section 3 of the Existing Credit
Agreement is amended by adding to the end of such Section the following new
Subsection 3.12:
3.12 CLEC Buildout. Borrower will not and will not permit
any of its Subsidiaries to make any expenditures of any kind,
including, without limitation, capital expenditures, operating expenses
or other expenses under GAAP, related to the operation of a competitive
local exchange carrier (CLEC), except in the Existing CLEC Markets,
until such time as (i) the Excess Cash Flow from the Existing CLEC
Markets determined on an aggregate basis is positive for at least (2)
consecutive quarters; (ii) there exists at the time of any proposed
CLEC expansion no currently existing Event of Default; (iii) the
Borrower's Total Leverage Ratio is less than 3.50:l.00 for the two (2)
consecutive quarters immediately preceding such proposed expansion; and
(iv) the Borrower has delivered to the Administrative Agent a business
plan and Projections for such expansion which demonstrate, based on
reasonable assumptions, that (A) such business plan is fully funded
with the liquidity resources then available to the Borrower and without
need of additional financing, other than the Loans; (B) the Borrower
will be in compliance with all covenants in Subsections 4.1 through 4.5
for the next succeeding twelve (12) calendar months after giving effect
to such proposed expansion; and (C) the Borrower's Total Leverage
Ratio, determined on a consolidated basis, will be less than 3.50:1.00
for the next succeeding twelve (12) calendar months after giving effect
to such proposed expansion; provided, however, this covenant shall not
restrict the Borrower or any of its Subsidiaries from making any
expenditure in any Existing CLEC Market; provided, further, any Loan
Party may continue to serve customers located outside of the Existing
CLEC Markets who were customers of such Loan Party as of September 12,
2002 and who do not, in the aggregate, account for a material portion
of the revenues from the CLEC operations of the Loan Parties.
1.4 Revised Exhibit 4.6(C). Exhibit 4.6(C) to the Existing Credit
Agreement is amended by amending and restating such exhibit as set forth on
Exhibit A hereto.
1.5 Amendment to Section 5.13(B). Subsection 5.13(B) of the
Existing Credit Agreement is hereby amended by amending and restating such
Subsection in its entirety as follows:
(B) The Licenses are valid and in full force and effect
without conditions except for such conditions as are generally
applicable to holders of such Licenses. Except as set forth on Schedule
5.13(B), no event has occurred and is continuing which
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Amendment to Credit Agreement/ D&E
could reasonably be expected to (i) result in the imposition of a
forfeiture or the revocation, termination or adverse modification of
any such License or (ii) materially and adversely affect any rights of
any Loan Party or its Subsidiaries or any other holder thereunder.
Except as set forth on Schedule 5.13(B), each Loan Party has no reason
to believe and has no knowledge that any License will not be renewed in
the ordinary course. Neither any Loan Party nor any of its Subsidiaries
is a party to any investigation, notice of violation, order or
complaint issued by or before the FCC, and there are no proceedings
pending by or before the FCC which could in any manner threaten or
adversely affect the validity of any License.
1.6 Amendment to Section 9.2. Subsection 9.2 of the Existing
Credit Agreement is hereby amended by amending and restating such Subsection in
its entirety as follows:
9.2 Amendments and Waivers. Except as otherwise provided
herein, no amendment, modification, termination or waiver of any
provision of this Agreement, the Notes or any of the other Loan
Documents, or consent to any departure by Loan Parties therefrom, shall
in any event be effective unless the same shall be in writing and
signed by Borrower and Requisite Lenders (or Administrative Agent, if
expressly set forth herein, in any Note or in any other Loan Document);
provided, that except to the extent permitted by any applicable Lender
Addition Agreement, no amendment, modification, termination or waiver
shall, unless in writing and signed by all Lenders, do any of the
following: (i) increase any Lender's Pro Rata Share of any Loan
Commitment; (ii) reduce the principal of, rate of interest on or fees
payable with respect to any Loan; (iii) extend the Revolving Loan
Expiration Date, the Term Loan A Maturity Date or Term Loan B Maturity
Date or extend the date on which any Obligation is to be paid; (iv)
change the aggregate unpaid principal amount of the Loans; (v) change
the percentage of Lenders which shall be required for Lenders or any of
them to take any action hereunder; (vi) release Collateral (except if
the release of such Collateral is permitted under and effected in
accordance with, including any consents and approvals required therein,
Subsection 8.2(I) or any other Loan Document) or any guaranty of the
Obligations (except to the extent expressly contemplated thereby);
(vii) amend or waive this Subsection 9.2 or the definitions of the
terms used in this Subsection 9.2 insofar as the definitions affect the
substance of this Subsection 9.2; and (viii) consent to the assignment,
delegation or other transfer by any Loan Party or its Subsidiaries of
any of its rights and obligations under any Loan Document; provided,
further, that no amendment, modification, termination or waiver
affecting the rights or duties of Administrative Agent under any Loan
Document shall in any event be effective, unless in writing and signed
by Administrative Agent, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the specific
purpose for which it was given. No amendment, modification, termination
or waiver of any provision of any Note shall be effective without the
written concurrence of the holder of that Note. No notice to or demand
on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance
with this Subsection 9.2 shall be binding upon each holder of the Notes
at the time outstanding, each future holder of the Notes, and, if
signed by Borrower, on Loan Parties.
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Amendment to Credit Agreement/ D&E
1.7 Amendment to Subsection 10.1. Subsection 10.1 of the Existing
Credit Agreement is hereby amended by amending and restating the following
definitions in their entirety as follows:
"Excess Cash Flow" means, for any fiscal quarter, (i)
Operating Cash Flow for such fiscal quarter minus (ii) the sum of (a)
Fixed Charges, (b) net changes in working capital for such quarter and
(c) voluntary reductions of the Revolving Loan Commitment under
Subsection 1.6(C); provided, however, corresponding voluntary
prepayments of Revolving Loans are made as described in Subsection
1.7(A).
"Existing CLEC Markets" means the following markets in
Pennsylvania in which the Loan Parties operate a competitive local
exchange carrier and includes branches or affiliates of CLEC customers
in such markets located outside of such markets: Lancaster, Harrisburg,
Reading, Altoona, Pottstown, State College and Williamsport.
"Fixed Charges" means the sum of (i) scheduled principal
payments, (ii) interest expense, (iii) income taxes, (iv) capital
expenditures and (v) dividends and distributions to shareholders.
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of September 12, 2002, among Administrative Agent, CoBank and
the Lenders, as amended, restated or otherwise modified.
"Loan Commitment" and "Loan Commitments" mean, individually,
each of the Revolving Loan Commitment, the Term Loan A Commitment and
the Term Loan B Commitment, and collectively, the Revolving Loan
Commitment, Term Loan A Commitment and the Term Loan B Commitment, as
each such commitment is reduced from time to time as provided in this
Agreement.
"Long-Term Fixed Rate Loan" means a Term Loan A accruing
interest at a rate determined by reference to the Long-Term Fixed Rate.
SECTION 2. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Amendment, each of the Loan Parties hereby represents and warrants to the
Administrative Agent and the Lenders as follows:
2.1 Authorization of Amendment, Etc. Each Loan Party has the right
and power, and has taken all necessary action, to authorize it to execute,
deliver and perform its obligations under this Amendment in accordance with its
terms. This Amendment has been duly executed and delivered by each Loan Party
and is a legal, valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its terms.
2.2 Compliance of Amendment with Laws, Etc. The execution,
delivery and performance of this Amendment in accordance with its terms do not
and will not, by the passage
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Amendment to Credit Agreement/ D&E
of time, the giving of notice or otherwise, require any governmental approval or
violate any applicable law relating to any Loan Party;
(a) conflict with, result in a breach of or constitute a
default under the articles or certificate of incorporation or bylaws of
any Loan Party, any material provisions of any indenture, agreement or
other instrument to which such Loan Party is a party or by which such
Loan Party or any of its properties may be bound or any governmental
approval relating to such Loan Party, or
(b) result in or require the creation or imposition of
any Lien upon or with respect to any property now owned or hereafter
acquired by any Loan Party.
2.3 Representations in Credit Agreement. After giving effect to
revisions to the Schedules to the Credit Agreement set forth on Schedule A to
the Joinder Agreement of CEI Networks, Inc., dated as of even date herewith, all
of the representations and warranties set forth in the Amended Credit Agreement,
will be accurate in all material respects as of the date hereof, except to the
extent that such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall have been true and
correct on and as of such date.
SECTION 3. EFFECTIVENESS
This Amendment shall become effective upon the satisfaction in full of
each of the following conditions precedent:
3.1 Executed Amendment. This Amendment shall have been duly
authorized and executed by the parties hereto, shall be in full force and
effect, no default shall exist hereunder and original counterparts thereof shall
have been delivered to the Administrative Agent.
3.2 Payment of Fees. The Loan Parties shall reimburse the Lenders
and the Administrative Agent for all costs associated with the negotiation,
execution, enforcement and administration of this Amendment, including, without
limitation, all reasonable attorneys' fees, costs and expenses incurred by the
Lenders and the Administrative Agent.
SECTION 4. MISCELLANEOUS
4.1 Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Amendment or its terms to produce or account
for more than one of such counterparts.
4.2 Construction. This Amendment is a Loan Document executed
pursuant to the Existing Credit Agreement and shall be construed, administered
and applied in accordance with all of the terms and provisions of the Existing
Credit Agreement.
4.3 Governing Law. This amendment shall be governed by, construed
and enforced in accordance with the laws of the State of Colorado, without
reference to the conflicts or choice of law principles thereof.
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Amendment to Credit Agreement/ D&E
4.4 Successors and Assigns. This amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
[Signatures Begin on Next Page]
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Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
D & E COMMUNICATIONS, INC., as Borrower
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Sr. VP, CFO & Treasurer
THE DENVER AND EPHRATA TELEPHONE & TELEGRAPH
COMPANY, as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
D&E NETWORKS, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: VP, Secretary & Treasurer
D & E WIRELESS, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
D & E SYSTEMS, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
[Signatures continued on following page.]
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D & E INVESTMENTS, INC., as a Subsidiary
Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
D & E VENTURES, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: CFO, Secretary & Treasurer
D&E MANAGEMENT SERVICES, INC., as a
Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: VP, Secretary & Treasurer
PCS LICENSES, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: VP, Secretary & Treasurer
CONESTOGA ENTERPRISES, INC., as a Subsidiary
Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Secretary & Treasurer
[Signatures continued on following page.]
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THE CONESTOGA TELEPHONE AND
TELEGRAPH COMPANY, as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
BUFFALO VALLEY TELEPHONE COMPANY, as a
Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
CONESTOGA MOBILE SYSTEMS, INC., as a
Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
CONESTOGA WIRELESS COMPANY, as a
Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
CONESTOGA INVESTMENT CORPORATION, as a
Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
[Signatures continued on following page.]
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INFOCORE, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X.Xxxxxx
Title: VP, Secretary & Treasurer
TELEBEAMUSA, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: VP, Secretary & Treasurer
CEI NETWORKS, INC., as a Subsidiary Guarantor
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: VP, Secretary & Treasurer
[Signatures continued on following page.]
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COBANK, ACB, as Administrative Agent and a Lender
By: /s/ Xxxxxxxxxxx X. Xxxx
------------------------------------------
Name: Xxxxxxxxxxx X. Xxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Manager of Operations
SUNTRUST BANK, as a Lender
By: /s/ J. Xxxx Xxxxxxx
------------------------------------------
Name: J. Xxxx Xxxxxxx
Title: Director
XXXXXXX BANK, as a Lender
By: /s/ Xxxxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
BANK OF LANCASTER COUNTY, as a Lender
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
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NATIONAL CITY BANK, as a Lender
By: /s/ Xxx X. Xxxxxxxx
------------------------------------------
Name: Xxx X. Xxxxxxxx
Title: Senior Vice President
XXXXXX BANK, as a Lender
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
IN WITNESS WHEREOF, I have executed this Compliance Certificate as of
September, 12, 2002.
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
[CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER]
D & E Communications, Inc.
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